Inside Auction "sellers regret" Tips by Burleson Consulting

As a licensed auctioneer, I've seen many cases of "sellers regret" where the consignor is unhappy with the sale price of their goods.  This normally happens when someone consigns an item to an auctioneer and the item is sold "without reserve" in an absolute auction where the highest bidder wins, regardless of the price.

Sellers can protect themselves by requiring a written statement from the auctioneer that the item will have a reserve price of $nn, but the problem is that many auctioneers, fearing buyer complaints, will start the bidding at the reserve price, and nobody bids on the item.

From an auctioneer's point-of-view, it's bad business to start the bidding on a item with an undisclosed reserve price.  The bidding gets heated, and the highest bidder is then told that the high bid does not meet the reserve price.  This causes bad-will with the high bidder, and many auction houses are reluctant to do this.

This article notes that sellers regret can be problematic, especially when the auctioneer has sold the item for a "low price".  In this case, the consignor is accused to libel and defamation:

"A consignor, apparently unhappy with the $300,000 sale price of his vehicle, placed chains and locks on the vehicle after it crossed the auction block and was sold, while it sat in the area where featured auction cars were displayed.

He posted multiple notices on the vehicle claiming that the sale was void due to claimed "auction irregularities," and published other false and defamatory statements about Barrett-Jackson in view of the company's customers and the thousands of patrons attending the event.

Barrett-Jackson's internal legal and security teams, and the Scottsdale Police Department, responded to the incident and documented the damage."

The details are not clear, but we can safely assume that the consignor was not happy with the highest bid, and somehow felt that the auctioneer was responsible for their financial loss.

Who's to blame when an item is auctioned at a low price?

I've seen unscrupulous auctioneers tell sellers that the item will bring "big bucks" and encourage them to offer-up the item as an "absolute" auction, without a reserve price.  They make the consignor sign a document stating that the item will be sold without reserve, but the seller is OK with that stipulation because of oral warrantees of the predicted sale price made by the auctioneer.

Another technique is "short selling" when the auctioneer drops the hammer fast, and the seller does not feel that the auctioneer spent enough time soliciting bids.

In the case above, the seller was quite unhappy that their car only sold for $300k, and allegedly published numerous lies about the auction company:

"An ongoing internet smear campaign has stemmed from this seller dispute, with numerous defamatory rumors and untrue statements being published to websites and online chat rooms viewed by the company's core customer base.

In particular, an untrue, derogatory and defamatory "article" referring to the above incident has made its way onto more than 20 automotive-related online "blogs" and discussion boards frequented by thousands of classic car enthusiasts around the world."

Again, this articles does not elaborate about the details and what the disgruntled consignor published, but the auctioneer felt that it was un-true and defamatory:

"Barrett-Jackson filed its lawsuit in order to protect its 36-year reputation and business interests by seeking to correct the untrue information that has been published, and by filing suit against the responsible party on six separate counts, including defamation and breach of contract."

In USA libel cases, the auctioneer has the burden of proof to show that the statements were false and that the lies damaged their reputation.

The fine line between opinion and fact

The central issue when complaining about an auction house is distinguishing between opinion and fact.  You cannot state a fact and simple preface it with "In my opinion", and disgruntled auctioneer customer must be very careful not to make any false statements of fact.  This article also notes another allegation against this auction house:

"Martin, who was also covering the event for the New York Times, said he was unjustly targeted by Barrett-Jackson because of his prior columns, which focused on what he described as shady bidding tactics and what he calls the hyped-up values of the popular muscle cars that are fetching high prices at auction."

When consigning any item of high value for auction, both the consignor and auctioneer house should have a complete contract stating all aspects of the sale.